I know the whole area of economics is complicated so unless you are willing to go beyond the rhetorical talking points you find in conservative publications I suggest you stay away from the subject altogether.

Based on your quote ken, I think it is fair to say that I've forgotten more about economics than you'll ever hope to know.

Taxation: In the first place, our tax structure as presently weighted exerts too heavy a drain on a prospering economy compared, for example, to the net drain in competing Common Market nations. If the United States were now working at full employment and full capacity, this would produce a budget surplus, at present taxation rates, of about $8 billion this year. It indicates what a heavy tax structure we have, and it also indicates the effects that this heavy tax structure has on an economy moving out of a recession period. We saw that after the '58 recession; we have seen it after the '60 recession in the last months.

Steve, you obviously are coming to this discussion from an idealogical position that ignores actual facts that are important for someone to understand any kind of tax policy.

Kennedy also faced the threat of inflation. The P/E ratios for the DJI at the time were 23:1, a clear signal that the market was expecting higher earnings in the future. Kennedy believed that that there was only only one way for companies to reach those higher earning: raising prices (inflation) as the economy was nearing full capacity and full employment. The market was signaling that this is what was expected.

His solution was to target tax cuts to businesses. This would provide businesses with internally generated funds to fund CAPITAL equipment which increases productivity which leads to non-inflationary growth.

As to deficits producing revenue: borrowed money, once spent, goes to pay for salaries and other taxable economic activites. For example, every borrowed dollar that ends up as taxable income can return 30% to 50% back to the treasury as income and payroll taxes. Our host on this site is a good example of this. His salary at DISA is paid with borrowed money, yet he still pays taxes on his salary.

I know the whole area of economics is complicated so unless you are willing to go beyond the rhetorical talking points you find in conservative publications I suggest you stay away from the subject altogether.

What is funny is that the Cato Institute is so late to to the party on this. It was entirely predictable that the Bush tax cut policies, which the Cato Institute supported, were going to lead to increased budget deficits. But now, that Bush spending policies are causing even higher deficits, now, they are suddenly against deficits. Wellcome to reality.

This is misleading, which appears to be typical for ken, the Cato Institute has been opposed to Bush's spending for years. A quick search of their site of Bush and Spending will turn up numerous results.

Now if they would just grow up and stop pretending that tax cuts can fund increased spending they might gain some overall credibility.

Again, this looks misleading. I don't know of anywhere where the Cato Institute has taken such a position.

Unfortunately, Ken, you are dead wrong. Since the tax cuts became effective in 2002, federal tax revenues have risen sharply.

In other words, in an over-taxed world such as ours, lower taxes lead to higher revenue.

Actually, in 2002 tax reciepts were lower, as well as for 2003. In 2004 receipts were higher, but how much of it was due simply to economic growth. Granted tax rates play a role there, but the numbers we are talking about are not sufficient to make me think that lower taxes have substantially raised revenue beyond what revenues would have been without the tax cuts and the economic growth.

Matilda, did tax revenues rise during Clinton presidency? They did? Wasn’t that while taxes increased?

Yes, total government receipts, as well as federal income tax receipts increased every year Clinton was President. Same for corporate taxes on corporate income.

Matilda, never before in world history, until the current crop of addle brained conservatives came upon the scene, did anyone think that you could raise revenue by lowering taxes.

Of course, Ken is once again being misleading. Not only did John F. Kennedy make this very argument, but so have others such as John Maynard Keynes. Of course, the idea is that one has to be on the right hand side of the "Laffer curve", which in all likelihood we aren't.

Wrong McGehee, Kennedy specifically was concerned about the looming budget surpluses that could act as a Keysian brake on the economy. His tax cuts where to battle surpluses. He cut taxes, cut revenue and preserved government deficit spending which is what is stimulative.

Another inaccurate statement from Ken. Kennedy's statement about tax cuts:

"It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now."

Further, McGhee is correct about deficits being the rule rather than the exception. Since the end of WWII there have been surpluses for only 7 years.

Bush II is proving that massive budget deficits can also provide a temporary hike in revenue, although at an extremely high cost.

And this is just plain wrong. Deficits cover for revenue shortfalls, they are not revenues, and are in fact represent future liabilities.

Tax cuts cut revenue. It is the deficit spending that makes up for the lost revenue from the tax cuts.

Matilda, never before in world history, until the current crop of addle brained conservatives came upon the scene, did anyone think that you could raise revenue by lowering taxes.

You're including President John F. Kennedy and practically every president of either party before him in "the current crop of addle brained conservatives" -- you do realize that, don't you?

It's laffer-able that as has been said many times eloquently, that for Republicans tax cuts are the way to end recession, decrease deficits, limit the size of government, promote abstinence, slice watermelon, etc.

Just a coincidence that greed = wanting to keep things to oneself, I suppose.

"It was entirely predictable that the Bush tax cut policies, which the Cato Institute supported, were going to lead to increased budget deficits."

Unfortunately, Ken, you are dead wrong. Since the tax cuts became effective in 2002, federal tax revenues have risen sharply.

In other words, in an over-taxed world such as ours, lower taxes lead to higher revenue.

This has happened many times before and is plain to see so I don't know why the "left" doesn't get it.

The reason we have budget deficits is simple...the federal government is spending money like drunken sailors.

If we raise taxes back to pre-Bush levels, revenues will drop and then we will really have a deficit problem.

Now if they would just grow up and stop pretending that tax cuts can fund increased spending they might gain some overall credibility.

You are right on target. But, then again, look at any of our glorious politicians in Washington DC. Everyone of them would no sooner cut their pet money projects than jump out of an airplane without a parachute.

The lavish spending of every politician is their only means of re-election. In other words, their only legal means of vote buying.

If anyone wants to place the blame on someone. "Look in the mirror"